My Company

If you’ve followed the pundits on television and radio during the past year, and pay close attention in the weeks and months ahead, you’ll suddenly realize precisely what I’m alluding to: lay people casually switch between “health care” and “health insurance” as though they are synonymous.

Like many authors here on ProducersWEB, I keep a file of potential articles by my side. One of these blog ideas which has been waiting for its day has been a germ I first jotted down June 8, 2011, immediately following the 11th Circuit Court of Appeals hearing on the constitutionality of the Patient Protection and Affordable Care Act.

The issues broadcast that evening on C-SPAN were the very same as those being debated before the Supreme Court in Washington, D.C. this week. The trouble I had then — and continued to have in the ensuing year — is the too easy way in which discussion conflates the terms “health care” and “health insurance.”

The fact that the appellate judges could not distinguish the terms (and the “Supremes” are having difficulty today) reveal a fundamental design flaw in a law as massive in scope as the 2,700-page Patient Protection and Affordable Care Act.

You and I work in the field of insurance. We get it. But if you’ve followed the pundits on television and radio during the past year, and pay close attention in the weeks and months ahead, you’ll suddenly realize precisely what I’m alluding to: lay people casually switch between “health care” and “health insurance” as though they are synonymous.

PPACA — in its desire to please — does address both economic activities. In fact, without re-capping the dozens and dozens (if not hundreds) of brand-new, innovative health care programs created under the act, as well as the hundreds of health insurance regulations contemplated, it would be easy to blur the line.

We've been introduced to guaranteed insurability, pre-existing conditions clauses, dependent coverage provisions, a lift on lifetime caps, a new form of community rating, health exchanges ruled by navigators, medical homes, new ratings and reimbursements for Medicare Part C providers, a spectrum of taxes and penalties, a fleet of new pilot programs, Part D rebates, “essential” benefits ... wow.

Some are health care and some are health insurance, but ... what does Congress have the power to regulate, and which is the Supreme Court ruling over?

Lest you think this doesn’t matter — that I am the one confusing the argument by semantics — please allow me to correct that notion. Paul Clement, attorney for Florida (and plaintiff for the 26 challenging states) argued in front of the appellate court three-judge panel last June, “There’s no requirement that you actually use your mandated insurance to pay for your healthcare … that’s not the market that’s being regulated.”
He made it clear that the issue before the court is a health insurance issue. He conceded before Judge Stanley Marcus that Congress has the power to regulate both industries (health care and health insurance), but then concluded that “We’re regulating the consumption of health care. Because of the mandate, more people are going to be likely to pay for health care with insurance.”

When it came time to grill the acting Solicitor General Neal Katyal (defense), the judges wanted to know why the government couldn’t use the individual mandate to compel all kinds of purchases of national import. For instance, energy is as much a national crisis as health care and meets similar criteria. Why not compel the purchase of energy-efficient cars (the analog to insurance)?

The government argued that health care is unique and stops the slippery slope. Only in health care do we find cost-shifting, Katyal argued. In fact, it’s this $43 billion cost-shifting problem from the uninsured to the insured that necessitated the mandate in the first place. As a means to an end, Congress could’ve just said, “You shall provide health care.”

But they did not.

Fascinatingly, Judge Dubina then picked up the thread and shifted the entire topic without realizing it. Where the room had been debating health care, he followed, “I agree that health insurance is unique; we can’t predict when anyone will need it. It’s different from other products like automobiles.”

When asked how the tax (or penalty) would be enforced, Solicitor Katyal confirmed that individuals will be expected to check a box on our 1040s signifying we have at least essential coverage. If not, we’ll have to pay additional tax. By way of enforcement, the IRS will either offset future credits against unpaid taxes, or can bring suit for collection (but cannot levy, encumber, garnish, etc.).

When asked if it was Congress’ intent to raise revenue or compel conduct, Katyal either could not or would not answer.

Judge Hull then made the point of the day, noting that without any interest accruing on a paltry penalty ($695), and violators being asked to voluntarily self-report, how is the money raised any more collectable by the government than an unpaid medical bill? Only about 4 million at most would be subject to the penalty in the first place — and somehow that’s supposed to close the gap of
$43 billion in cost-shifting.

If you keep your ears and eyes open, you too will find a casual interchange of the terms health care and health insurance. Health care represents all of the medical services you and I receive from doctors, nurses and specialists in hospitals and other healthcare facilities.

Health insurance is but one of many means of funding or reimbursing such care. Congress was very careful in their choice of words. Let’s keep everyone honest in their discussions.

About the Author

Since the early 1970's, the Formans have been pioneers in the field of long-term care insurance, helping to design some of the earliest plans, and testifying before Congress. Today, Stephen Forman and his 2 brothers carry on the family tradition of leading the industry as vocal proponents and tho... More